May 2nd, 2025
Caption: A Defined Benefit Pension Plan pays a specified retirement income. It is based on factors such as years of service, your age of retirement, and the best years of pay. You will know what your retirement income will be when you leave the workplace, it’s called a pension promise.
When you retire, your retirement income comprises your personal savings, Canada Pension Plan (CPP), Old Age Security (OAS), and your work pension plan.
On your pay stub, you will see deductions for both your Canada Pension and your work pension plan. Simply put, those contributions, shared between you and your employer, are deferred wages set aside every pay period for the day when you retire.
If you work for Yukon Government or the Hospital Corporation, have indeterminate status, and have been working there for more than a year, chances are you are already either eligible for or are already contributing to your pension plan.
The two most common types of pension plans are: a Defined Benefit Pension Plan (DB) or a Defined Contribution Pension Plan (DC). Because both hospital and YG workers contribute to a Defined Benefit Plan, we won’t spend a lot of time on the DC plan, which is an inferior option to the DB Plan.
Defined Benefit Pension Plan (DB)
A DB plan pays a specified retirement income. It is based on factors such as years of service, your age of retirement, and the best years of pay. You will know what your retirement income will be when you leave the workplace, it’s called a pension promise.
Contributions towards the pension plan are shared between the Employer and the workers, but pension shortfalls are the responsibility of the Employer. Normally, such DB pension plans take the long view, usually with a planning window of 50 years. A defined benefit plan is usually the responsibility of the employer, unless the plan is jointly managed between the Union and the Employer.
In the instance of YG employees, the federal government backstops the pension plan in the event of any shortage, and the pool of contributors is much, much larger. Contributions are shared between the federal and territorial governments and agencies (employer) and territorial and federal workers from across the country.
The hospital DB plan is regulated and overseen by the Office of the Superintendent of Financial Institutions (OSFI), there are regular reporting requirements and strict provisions to ensure that financial health is maintained and appropriately administered.
Defined Contribution Pension Plan (DC)
Increasingly, more and more employers have shifted over to a DC plan because it is cheaper for them and offloads any liability to the employee. The key difference for workers is, while you still share payroll contributions, there is no pension promise or guaranteed pension income. All that is certain is the amount that you contribute to your plan. What you get when you retire will depend on your investments, the percentage the bank or insurance company takes of the top for managing your plan, and the timing of your retirement, whether during a general market pullback or during better times.
More information to follow, but in the meantime, please feel free to register for the upcoming pension sessions that have been scheduled for May 6th and 7th.
Three Meeting Options
This is your chance to learn more about your pensions and ask questions. Please RSVP for one of the events listed above.